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Monday, 14 May 2012

Australia's art resale scheme: can it ever be self-sustaining?

From John R. Walker, one of our Australian readers, comes this fascinating and provocative item:

"The
Australian government's minister for the Arts, Simon Crean, has just announced
an additional $700,000 in public funds to subsidize the operation of the
art resale scheme. This brings the total publicly funded commitment to nearly
$2.5 million, plus if you add the $1+ million that CAL (appointed collection
agency) has allocated, the scheme is rapidly exceeding a cost of $3 million:
so far, it has delivered just $600,000 in payments to artists. The
Government statement says: "As the income from resales increases, it
is anticipated the scheme will become self-sustaining."

The
scheme was premised on a market size and turnover that was, even at the height
of the boom, wildly overestimated by a factor of at least 2 or more. Even
a fully retrospective and compulsory scheme such as enacted in the UK, would
not be self-funding in Australia; the long term market here is simply not large
enough.

This
government's policies have had a devastating effect on the art market: the
resale scheme has undermined confidence resulting in reduced demand and,
at the same time the ruling on SMSF (Self-managed super funds) will result in a
massive over-supply of indigenous art for resale on to a reduced market. In this
situation, the very idea that a scheme premised on levying on the value of art
resales ever becoming even vaguely self-funding is ludicrous.

The
paradox is that the Australian government has done the resale royalty, at a
secondly instrumentation level, as professionally as it could be done and the
Act itself reflects the constraints of a constitution that set out very
consciously to embody the principles of responsible representative government:
therefore, the Australian scheme is a lawful scheme. However, the
messy reality is clear proof that resale royalties, at the level of principle,
if done lawfully and properly, are bad policy".

Do you agree with John, or do you take a different view? Do let us know!

3 comments:

The resale royalty scheme has been in operation in Australia since June 2010. There is information about the scheme, including the amount of royalties collected and the number of artists who have benefited, on the resale royalty website, www.resaleroyalty.org.au.

As at 31 March 2012, the scheme had generated more than $600,000 for more than 380 artists.

The Australian scheme exempts payment of the royalty if the resale is the first transfer of ownership since June 2010. While the majority of resales were exempted from payment when the scheme began, the proportion of resales eligible for a royalty is increasing as works continue to change hands.

A significant proportion of the funding we received from the government has been directed to engagement with, and assistance to, art market professionals and artists. Many of the artists eligible for royalties are Indigenous artists in remote areas. While our assistance and engagement will continue, there is now good awareness in the community about the scheme as a result of the initial focused education campaign.

Our experience has been that artists have welcomed the scheme. In addition to the royalties, they appreciate information about the sales history of their works. We have not seen any evidence that the scheme has been detrimental to artists’ interests.

Under the Australian scheme, an artist cannot waive their entitlement to royalties entirely, but can instruct us not to collect a royalty for a particular resale.

And I should finish by saying that despite John’s reservations about the policy underlying the scheme, he has generously provided us with helpful assistance on a number of matters associated with our management of the scheme.

In the absence of readily available and authoritative figures it's impossible to say whether the droit rather than the Global Financial crisis is having the supposedly "devastating effect on the art market" in Australia and has "undermined confidence resulting in reduced demand".

The "messy reality" is that we don't know. The messy reality is that the droit's probably been neither as wonderful as claimed by the Government nor as utterly nasty as claimed by its critics. Policy-by-hyperbole, rather than the droit as such, is what's bad.

Things are much worse than I feared. The royalty does not apply to lots of alternative art-like things and it makes no allowance for costs , of course it is affecting buyer behavior, particularly about living Indigenous art/artists.The percentage of Aboriginal art being sold on the secondary market is now less than 10% of the entire market and decreasing to a point where soon it will be more like 5% of the market. This takes the position of Aboriginal art back to where it was in the early 90s.

The resale royalty legislation is not just assisting this decline - it is actually quickening it. By imposing a levy on the trade of Aboriginal art through the Code it places this trade at a distinct competitive disadvantage to non-Aboriginal art.

Some large quality collections of indigenous art are to be auctioned at the end of this month, that is not because of confidence in the future.

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